No Silver Bullets ... and That's Good

According to folklore, a bullet made of silver could instantly vanquish a mythological monster, such as a werewolf. And in the business world, the term “silver bullet “describes a new development that can instantly kill a prevailing problem.

Too often in business we seek out silver bullets. But as our country finds its way through an extended economic slump, the phrase “there are no silver bullets “rings truer today than ever before.

And that is actually good news for our industry. We don’t need silver bullets to solve a problem. The reality is that as an industry, we are growing, both in sales dollars and store count. Our stores numbered 149,000 and our total sales eclipsed $700 billion last year. Both figures are record numbers and underscore how we continue to adapt and adjust to our consumers. We are first with new products, we continue to redefine “convenience “and we remain nimble and attuned to our customers’ changing needs and routines, from what they order to how they order it.

Inside this issue, you will find an array of fascinating insights, figures and the analysis behind category surges and dips. You will see what the top quartile—and, in some cases, what the top docile—is doing to distinguish itself from the rest of the pack.

But before you look at the numbers and contemplate how to continue our success into 2013 and beyond, we offer some advice we believe will prove invaluable to your short- and long-term success: Don’t look for silver bullets to save you. Rather, continue to execute and seize the trends.

We are compelled by a very powerful metric we use in our State of the Industry Report: capital productivity. Specifically, the top quartile is generating more than six times the operating profit of the bottom quartile. And even more impressive, it’s nearly double that of the second quartile.

We know what you may be thinking, and it’s not true. It’s not because of superior store size. In fact, we find that store size is less important than previously imagined. Rather, several factors make up the top quartile. Here are some lessons and opportunities:

Break-even CPG: Top-quartile chains require only half the break-even cents per gallon that bottom-quartile operators do. So the question is: How dependent are you on fuel margins? How effectively are you leveraging your forecourt?

Foodservice: We have said it before and we feel compelled to say it again: Foodservice is a critical part of successful-store growth. There are many iterations you can follow on your foodservice path. But as drug, mass and other retail channels make grab-and-go options more available, they are seeing what we already know: Customers want fresh immediate consumables that are a good value.

Trends: There is a significant gap between a fad and a lasting trend. Just as foodservice is a trend that’s here to stay, we see others emerging. The first rapidly emerging opportunity is electronic cigarettes. What barely existed five years ago is now a $1 billion segment and growing rapidly. There are countless brands on the market, and we expect the field will thin to a healthy, manageable pool of players. Just as we saw with bottled water and energy drinks in the previous decade, evidence supports that electronic cigarettes and smoke-free/oral tobacco products will continue to grow.

Another area of opportunity is fresh and healthy. Americans aren’t just saying that they want to be healthier; they increasingly are acting that way in stores. While we all enjoy our occasional indulgences, healthy options such as yogurt, nuts and a number of new snacks and beverages are enjoying significant growth. What opportunities can you tap into that reflect your market’s, or even specific customers’, health interests?

What we do know is that there is no silver bullet. There is no one-size-fits-all solution for an industry that is incredibly diverse and literally covers every community in the country. Rural or urban, affluent or working class, historic or modern—our communities represent the full gamut of what makes America great. It is our challenge—and our opportunity—to know what our specific markets want and to not only meet but also to exceed their expectations.

Let’s take these positive trends from 2012 and build upon them as a solid base for 2013 and beyond.

Since 2003 CSP magazine has ranked No. 1 in readership and market share over all other industry publications. C-store marketers have identified CSP as the preferred magazine source for their trade marketing communications. With industry-leading, highly targeted circulation to more than 100,000 subscribers, CSP reaches the key convenience retailing decision-makers fifteen times a year.